1. C O A L I T I O N Corner Affinity Groups Coalition Corner: Business training tools for HR staff, real estate licensees and other service professionals in the relocation and real estate industries © 2005, Employee Relocation Council/Worldwide ERC ® Coalition

2. C O A L I T I O N Corner Program Objectives This program supplements a monthly editorial feature in ERC’s Mobility magazine In this segment, users will learn: –How to define affinity programs –To name examples of affinity groups, and –How affinity groups assist their members –Why affinity relationships create a type of managed move

3. C O A L I T I O N Corner Affinity Groups Defined An affinity group is formed for the purpose of bringing purchasing power to its members, in order to obtain greater service or economic value than is possible to realize individually Value can be defined in terms of: –Added convenience –Ease of use –Quicker response –Resources that might not be known or available to the individual

4. C O A L I T I O N Corner Keys to Success An affinity group’s success depends on its strength, realized through a variety of sources, such as: –Value-added service(s) and/or rewards –Brand loyalty –Trust

5. C O A L I T I O N Corner Examples of Affinity Groups Some examples of affinity groups include: –Real estate licensees who are members of the National Association of REALTORS ® –Frequent flyer programs offered by airlines –Wholesale Clubs (Sam’s Club, Costco, etc.) –USAA, which offers its members insurance benefits, credit cards, real estate services, etc. –Employers who provide formalized added benefits to employees without additional overhead –Real estate brokers who offer services to employers and direct the business to their own companies

6. C O A L I T I O N Corner Value Services Some of the ways in which affinity groups offer value services in a real estate transaction might include: –Providing counselors to coordinate move details (including mortgages, title insurance, homeowner’s insurance, moving companies, utility hook-ups and other services) –Offering reduced costs of real estate-related charges and fees –Providing rebates (where allowable) on services such as real estate fees –Offering access to other consumer programs, such as college saving accounts and vehicle purchasing power

7. C O A L I T I O N Corner Why is this considered a managed move? In the real estate industry, an affinity group will refer its member/buyer/seller to a member of its network of real estate companies (or a range of pre-selected companies) which may offer specialized services When a transaction closes, the affinity group expects to receive a referral fee from the real estate brokerage, a part of which is sometimes refunded back to the member –Important Note: Before an affinity group can realize a referral fee from the real estate brokerage, the affinity group itself must hold a real estate broker license. It is essential to check state laws and regulations governing inducements, rebates and cash back to consumers as well as state disclosure requirements.

8. C O A L I T I O N Corner What’s the Incentive? Why would a real estate broker work with an affinity group, knowing about referral fee requirements? There are several incentives, including: – The ability to encourage consumer loyalty to a program or brand name – A means to offer exclusivity through a preferred network program – The added benefits of additional forms of advertising and promotion – The potential to develop a high volume of referrals – An ability to track/monitor the marketing costs to reach a targeted audience – Added assistance in identifying pre-qualified and motivated buyers and sellers

9. C O A L I T I O N Corner Is the Referral Fee Justified? Yes, because someone else has already marketed and pre-qualified the lead with a predictable closing ratio The true issues are cost, profit and level of effort to get a lead to closing

10. C O A L I T I O N Corner In Conclusion Any real estate brokerage needs to make a sound business decision as to whether the number of referrals being made to the brokerage will outweigh the competition for and the cost of the referral fees